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2024 (1) TMI 97 - AT - CustomsDebonding of 100% EOU - Demand of differential duty - Scope of conditions of the LOP and LTU - raw materials/inputs, consumed in the finished goods which have not been exported by an EOU in terms of notification No. No.52/2003-Customs dated 31.03.2003 - Confiscation - levy of penalty - HELD THAT:- From the perusal of the conditions specified in paragraph 1(3)(d)(ii) of the Notification No. 52/2003-Customs dated 31.03.2003 as amended, it transpires that there are two category of the goods for which these conditions are specified. One, in respect of capital goods and the second one, in respect of all other goods, other than the capital goods. The condition to be fulfilled in respect of capital goods is that these shall be installed within the EOU unit within specified time limit or such extended time limit, as may be allowed. Similarly, in respect of all other goods, which are mainly in the nature of inputs or raw materials, the condition is that they shall be used in connection with or in relation to the production or packaging of finished goods with in the specified time period or such extended period, as may be allowed; such finished goods may either be used in accordance with Standard Input Output Norms (SION) for export out of India or cleared for home consumption, as may be permitted by the JDC, SEEPZ in terms of extant provisions of EOU Scheme under the Foreign Trade Policy. In the present case, the facts of the case indicate that out of the imported duty free raw material/inputs for a total value of Rs.73.85 lakhs, part of it were used in the manufacture of finished goods at the EOU unit and remaining part of the raw materials/inputs which were lying in stock, at the time of de-bonding of the EOU unit of the appellants. In terms of the aforesaid condition, payment of an amount equal to duty leviable on the goods and applicable interest would arise, only if the imported duty free raw material/inputs have not been used either for export or for DTA home consumption. This is not the case of the appellants. The appellants have not violated the condition specified in paragraph 1(3)(d)(ii) of the Notification No. 52/2003-Customs dated 31.03.2003 as amended. The appellants have duly provided all the details necessary for debonding of the raw material/inputs, capital goods and paid the applicable duties in the present case. Thus, the alleged violation of 111(o) ibid, as concluded in the impugned order is not sustainable - the conclusion arrived by the learned Commissioner of Customs (Appeal) in the impugned order that the condition 1(3)(d)(ii) has been violated is not supported by any legal basis as per the text of the relevant condition in the notification; rather such an assertion is contrary to the legal provisions of the said notification. There are no merits in the impugned order passed by the learned Commissioner (Appeal), Pune in confiscation of goods, inasmuch as there is no violation of Section 111(o) ibid, and the demand of differential duty and imposition of penalty is not legally sustainable - the impugned order set aside - appeal allowed in favor of appellants.
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